California’s Napa Valley was doing just fine at the start of2020, thanks to the wine industry’s ability to attract tourists, according to Karin Alvarado, a managing partner andfinancial advisor at New Aspect Financial Services.
But then came the COVID- 19 pandemic. There was
“zero tourism” in the area as California locked down in
March, the advisor said. “Literally, our valley went from
thriving one day to ghost town and crickets. The winer-
Affiliated with Advisor Group’s Woodbury Financial
Services, Alvarado’s firm specializes in retirement plan-
ning and serves 55 businesses throughout Napa Valley
and Northern California. About 80% of its business cli-
ents were affected by the pandemic in some way, includ-
ing her nearly 20 winery clients, she says, adding that
the practice also works with seven nonprofit groups that have
been hurt by COVID- 19.
One of the largest wineries her firm serves has been hit veryhard by the pandemic. It has some 270 employees and has beena client of hers for about 10 years. The owner, who is in hislate 60s, contacted the firm “very stressed out in early April,”asking why there was no stop-loss solution in 401(k) plans, sherecalled, noting that his wife is also a personal client of her firm.
“We were able to sit down and have several conversations”with him in which she pointed out that the retirement planshis company uses for its staff can’t have stop-loss solutions asthey are employee-directed plans, Alvarado said.
“The main concern was that he was about to make a significant profit share contribution in April for all of his workers.Everybody looks forward to this, because we’re talking abouta $30 million plan, and a significant amount of money goes ineach year as a profit share,” she pointed out.
Noting those employees include grape growers, grape pickers and cellar workers, Alvarado added: “This is their lifesavings” in question. The winery owner was “extremely concerned” about what was happening with the stock marketamid the pandemic, and “he did not want to make the profitshare at this time — he was very uncomfortable” doing that.
But over the course of several discussions, she explained tohim that during prior pandemics, the market rebounded. “Wewere able to soothe his fears, and I am happy to report that justrecently the profit share was funded,” the advisor said.
Alvarado also pointed to two of her firm’s longtime nonprofitclients, which are funded by the government and donations, anddidn’t have much savings to cover several months of payroll.
Her firm helped out by providing one, a foster care facility in
Napa, with “some advanced plan design” for its retirement strate-
gies in order to “suspend their retirement plan liability within the
first two weeks,” she said. That organization furloughed some
most of them.
the other nonprofit
client, which helps
in Oakland, to a lender.
It received a Payroll
loan. As a result, she
said: “They’ve been able
to retain all their thera-
pists” and other staff.
Meanwhile, one of her individual clients, scheduled a retirement party for March 28, right after his official retirement wasto go into effect. Her firm has been managing his firm’s 401(k)plan for several years and also was helping him and his partnerwith personal retirement planning.
He was a “ball of stress” after the pandemic started,
Alvarado explained. “We had to remind him that our planning
philosophy was specifically in place to address these types of
situations and that he had nothing to worry about. He was
obviously scared to retire.”
But with her firm’s advice, the client, a 62-year-old man
who co-owned one of the largest landscaping companies in the
North Bay Area, went through with his retirement as planned.
His portfolio improved by the summer, when he was “loving
retirement,” she said.
“We were very fortunate in that we had already started ourfinancial plan, and so we had most of the money in safety,” theadvisor recalled. “We were waiting to transfer his account. Theworst happened while he was out of the market, ... and then wegot him back in,” she added.
In all, about 70% of her firm’s individual clients have beenaffected financially by the virus; many of them are pre-retirees inthe 55-to-65 age range. “I’ve had call after call with clients thatcan’t make a life insurance payment,” Alvarado said.
She speaks regularly with clients via video conferencing,which includes her oldest clients. “Nobody’s made any changes to their portfolios,” she said. Of the 19 wineries the firmworks with, almost 90% were able to get PPP loans.
“Napa is now about 75% back to normal. Our valley is resilient, and the wineries and restaurants have found ways toaccommodate guests outside. Unfortunately, due to the recentfires, smoke is certainly problematic, and guests now have todeal with that. This has been a challenging year for all of us,but we’ll get through it,” Alvarado shared in mid-September.